PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND AND GRANTING OF FINANCIAL SUPPORT UNDER THE SINGLE

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

CHAPTER 547

PARTICIPATION WITHIN THE SINGLE

RESOLUTION FUND AND GRANTING OF

FINANCIAL SUPPORT UNDER THE SINGLE

RESOLUTION MECHANISM ACT

To authorise the Government of Malta to enter into the agreement on the

transfer and mutualisation of contributions to the Single Resolution Fund during

the transitional period as defined in the Act and to provide for the entering into

financial or other agreements or arrangements with the participants of the

Single Resolution Mechanism.

29th November, 2015

ACT XXXIV of 2015 , as amended by Act XXI of 2016.

(1) The short title of this Act is the Participation within the

Single Resolution Fund and granting of financial support under the

Single Resolution Mechanism Act.

(2) This Act shall come into force on such date as the Minister

responsible for Finance may by notice in the Gazette establish, and

different dates may be so established for different provisions or

different purposes of this Act.

(Article 2)

AGREEMENT

ON THE TRANSFER AND MUTUALISATION

OF CONTRIBUTIONS TO THE SINGLE RESOLUTION FUND

THE CONTRACTING PARTIES, the Kingdom of Belgium, the Republic of

Bulgaria, the Czech Republic, the Kingdom of Denmark, the Federal Republic of

Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of

Spain, the French Republic, the Republic of Croatia, the Italian Republic, the

Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Grand

Duchy of Luxembourg, Hungary, the Republic of Malta, the Kingdom of the

Netherlands, the Republic of Austria, the Republic of Poland, the Portuguese

Republic, Romania, the Republic of Slovenia, the Slovak Republic and the Republic

of Finland;

COMMITTED TO achieving the establishment of an integrated financial

framework in the European Union of which the banking union is a fundamental part;

RECALLING the Decision of the representatives of the euro area Member States

meeting within the Council of the European Union of 18 December 2013, related to

the negotiation and conclusion of an intergovernmental agreement concerning the

Single Resolution Fund ("the Fund") established according to Regulation of the

European Parliament and of the Council establishing uniform rules and a uniform

procedure for the resolution of credit institutions and certain investment firms in the

framework of a Single Resolution Mechanism and a Single Resolution Fund * ("SRM

Regulation"), as well as the Terms of Reference attached to that Decision;

WHEREAS

(1) The European Union has in the past years adopted a number of legal acts

fundamental for the achievement of the internal market in the field of financial

services and for guaranteeing the financial stability of the euro area and of the Union

as a whole, as well as for the process towards deeper economic and monetary union.

(2) In June 2009, the European Council called for the establishment of a

"European single rule book applicable to all financial institutions in the Single

Market". The Union has thus established a single set of harmonised prudential rules,

which credit institutions throughout the Union must respect, through Regulation

(EU) No. 575/2013 of the European Parliament and of the Council # and Directive

2013/36/EU of the European Parliament and of the Council + .

(3) The Union has further set up the European Supervisory Authorities (ESAs)

to which a number of tasks on micro-prudential supervision are allocated. They are

*

Regulation of the European Parliament and of the Council establishing uniform rules and a

uniform procedure for the resolution of credit institutions and certain investment firms in the

framework of a Single Resolution Mechanism and a Single Resolution Fund and amending

Regulation (EU) No. 1093/2010 of the European Parliament and of the Council.

# Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013

on prudential requirements for credit institutions and investment firms and amending

Regulation (EU) No. 648/2012 (OJ L 176, 27.6.2013, p. 1).

+

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on

access to the activity of credit institutions and the prudential supervision of credit institutions and

investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and

2006/49/EC (OJ L 176, 27.6.2013, p. 338).

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

the European Banking Authority (EBA) established by Regulation (EU) No. 1093/

2010 of the European Parliament and of the Council * the European Insurance and

Occupational Pensions Authority (EIOPA) established by Regulation (EU) No. 1094/

2010 of the European Parliament and of the Council # and the European Securities

and Markets Authority (ESMA) established by Regulation (EU) No. 1095/2010 of

the European Parliament and of the Council + . That was accompanied by the

establishment of the European Systemic Risk Board by Regulation (EU) No. 1092/

2010 of the European Parliament and of the Council ¢ to which some functions of

macro-prudential supervision have been allocated.

(4) The Union has established a Single Supervisory Mechanism through Council

Regulation (EU) No. 1024/2013, ** conferring specific tasks on the European Central

Bank (ECB) concerning policies relating to the prudential supervision of credit

institutions, and conferring upon the ECB, acting jointly with the national competent

authorities, powers of supervision over the credit institutions established in the

Member States whose currency is the euro and in the Member States whose currency

is not the euro which have established a close cooperation with the ECB for

supervision purposes ("the participating Member States").

(5) Through the Directive of the European Parliament and of the Council

establishing a framework for the recovery and resolution of credit institutions and

investment firms ## ("BRR Directive"), the Union harmonises national laws and

regulations on the resolution of credit institutions and certain investment firms,

including the establishment of national resolution financing arrangements.

(6) The European Council of 13/14 December 2012 stated that "In a context

where bank supervision is effectively moved to a single supervisory mechanism, a

single resolution mechanism will be required, with the necessary powers to ensure

that any bank in participating Member States can be resolved with the appropriate

tools.". The European Council of 13/14 December 2012 further stated that "The

*

Regulation (EU) No. 1093/2010 of the European Parliament and of the Council 24 November

2010 establishing a European Supervisory Authority (European Banking Authority), amending

Decision No. 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331,

In this Act, unless the context otherwise requires

"Agreement" means the agreement on the transfer and

mutualisation of contributions to the Single Resolution Fund

between the Kingdom of Belgium, the Republic of Bulgaria, the

Czech Republic, the Kingdom of Denmark, the Federal Republic of

Germany, the Republic of Estonia, Ireland, the Hellenic Republic,

the Kingdom of Spain, the French Republic, the Republic of

Croatia, the Italian Republic, the Republic of Cyprus, the Republic

of Latvia, the Republic of Lithuania, the Grand Duchy of

Luxembourg, Hungary, the Republic of Malta, the Kingdom of the

Netherlands, the Republic of Austria, the Republic of Poland, the

Portuguese Republic, Romania, the Republic of Slovenia, the

Slovak Republic and the Republic of Finland of the 21st May 2014,

annexed in the Schedule to this Act;

"Malta" has the meaning assigned to it by article 124 of the

Constitution of Malta;

"Minister" means the Minister responsible for Finance;

"Single Resolution Mechanism" means the mechanism

established through Regulation (EU) No. 806/2014 of the European

Parliament and of the Council of 15 July 2014 establishing uniform

rules and a uniform procedure for the resolution of credit

institutions and certain investment firms in the framework of a

Single Resolution Mechanism and a Single Resolution Fund and

amending Regulation (EU) No. 1093/2010 of the European

Parliament and of the Council;

"Single Resolution Fund" means the fund established according

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

to Regulation (EU) No. 806/2014 of the European Parliament and

of the Council of 15 July 2014 establishing uniform rules and a

uniform procedure for the resolution of credit institutions and

certain investment firms in the framework of a Single Resolution

Mechanism and a Single Resolution Fund and amending Regulation

(EU) No. 1093/2010 of the European Parliament and of the

Council;

"Single Supervisory Mechanism" means the mechanism

established through Council Regulation (EU) No. 1024/2013 of 15

October 2013 conferring specific tasks on the European Central

Bank concerning policies relating to the prudential supervision of

credit institutions;

"transitional period" means the period from the 1st January 2016

until the date when the Fund reaches the target level fixed in

Article 69 of the Single Resolution Mechanism Regulation or 1st

January 2024, whichever is earlier.

(1) Subject to the provisions of this Act, the Government

of Malta shall participate in the Agreement relative to transfer and

mutualisation of contributions to the Single Resolution Fund during

the transitional period, in accordance with the terms and conditions

set out in the Agreement, as may be amended from time to time, for

the purposes identified under sub-article (2).

(2) The Agreement provides for the uniform rules and

procedures for the transfer of contributions to the Single Resolution

Fund and for the recourse to the compartments allotted to

participating Member States in the Single Resolution Fund in times

of economic crisis.

The Government of Malta is hereby authorised to ratify the

Agreement.

Any contribution granted by the Government of Malta,

beyond the purpose specified under article 3(2), may only be done

in such a manner and for such purpose as the House of

Representatives may by resolution determine.

The Minister may make regulations to carry out any of the

obligations under the Agreement.

The Minister shall appear at least once a year before the

Public Accounts Committee or before another committee of the

House of Representatives which from time to time may be tasked

with the economic and financial scrutiny of Government for the

purpose of rendering account of the workings of the Single

Resolution Fund insofar as this is in conformity with the

obligations of Malta.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

12.2010, p. 12).

#

Regulation (EU) No. 1094/2010 of the European Parliament and the Council of 24 November

2010 establishing a European Supervisory Authority (European Insurance and Occupational

Pensions Authority), amending Decision No. 716/2009/EC and repealing Commission

Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48).

+

Regulation (EU) No. 1095/2010 of the European Parliament and of the Council 24 November

2010 establishing a European Supervisory Authority (European Securities and Markets

Authority), amending Decision No. 716/2009/EC and repealing Commission Decision 2009/

77/EC (OJ L 331, 15.12.2010, p. 84).

¢

Regulation (EU) No. 1092/2010 of the European Parliament and of the Council of 24

November 2010 on European Union macro-prudential oversight of the financial system and

establishing a European Systemic Risk Board (OJ L 331, 15.12.2010, p. 1).

** Council Regulation (EU) No. 1024/2013 of 15 October 2013 conferring specific tasks on the

European Central Bank concerning policies relating to the prudential supervision of credit

institutions (OJ L 287, 29.10.2013, p. 63).

## Directive of the European Parliament and of the Council establishing a framework for the

recovery and resolution of credit institutions and investment firms and amending Council

Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC,

2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/

2010 and (EU) No. 648/2012, of the European Parliament and of the Council

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

single resolution mechanism should be based on contributions by the financial sector

itself and include appropriate and effective backstop arrangements. This backstop

should be fiscally neutral over the medium term, by ensuring that public assistance is

recouped by means of ex post levies on the financial industry.". The Union has, in

that context, adopted the SRM Regulation which creates a centralised system of

decision making for resolution, endowed with the adequate financing means through

the establishment of the Fund. The SRM Regulation applies to the entities located in

the participating Member States.

(7) The SRM Regulation establishes, in particular, the Fund as well as the

modalities for its use. The BRR Directive and the SRM Regulation lay down the

general criteria to determine the fixing and calculation of ex ante and ex post

contributions of institutions necessary for the financing of the Fund, as well as the

obligation of Member States to levy them at national level. Nonetheless, the

participating Member States who raise the contributions on the institutions located in

their respective territories according to the BRR Directive and the SRM Regulation,

remain competent to transfer those contributions towards the Fund. The obligation to

transfer the contributions raised at national level towards the Fund does not derive

from the law of the Union. Such obligation will be established by this Agreement

which lays down the conditions upon which the Contracting Parties, in accordance

with their respective constitutional requirements, jointly agree to transfer the

contributions that they raise at national level to the Fund.

(8) The competence of each of the participating Member States to transfer

contributions raised at national level should be exercised in such a manner that

respects the principle of sincere cooperation enshrined in Article 4(3) of the Treaty

on European Union (TEU), according to which Member States shall to, inter alia,

facilitate the achievement of the Union's tasks and refrain from any measure which

could jeopardise the attainment of the Union's objectives. For that reason,

participating Member States should ensure that financial resources are uniformly

channelled towards the Fund, hence guaranteeing its proper functioning.

(9) Accordingly, the Contracting Parties have concluded this Agreement

whereby, inter alia, they establish their obligation to transfer the contributions raised

at national level towards the Fund, pursuant to uniform criteria, modalities and

conditions, in particular, the allocation during a transitional period of the

contributions they raise at national level to different compartments corresponding to

each Contracting Party, as well as the progressive mutualisation of the use of the

compartments in such a manner that the compartments will cease to exist at the end

of that transitional period.

(10) The Contracting Parties recall that it is their aim to preserve a level playing

field and minimise the overall cost of resolution to tax payers and will consider the

overall burden on the respective banking sectors when designing the contributions to

the Fund and their tax treatment.

(11) The content of this Agreement is limited to those specific elements

concerning the Fund that remain within the competence of Member States. This

Agreement does not affect common rules established under the law of the Union nor

does it alter their scope. It is rather designed as complementary to the Union

legislation on banking resolution and as supportive and intrinsically linked to the

achievement of Union policies, in particular the establishment of the internal market

in the field of financial services.

(12) National laws and regulations implementing the BRR Directive, including

those related to the establishment of national financing arrangements, start to apply

as from 1 January 2015. The provisions concerning the establishment of the Fund

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

under the SRM Regulation will be, in principle, applicable as from 1 January 2016.

As a consequence, the Contracting Parties will raise contributions earmarked to the

national resolution financing arrangement they are to establish up to the date of

application of the SRM Regulation, at which date they will start raising the

contributions earmarked to the Fund. In order to reinforce the financial capacity of

the Fund as of its inception, the Contracting Parties commit to transfer to the Fund

the contributions they have raised by virtue of the BRR Directive up to the date of

application of the SRM Regulation.

(13) It is acknowledged that there may exist situations where the means available

in the Fund are not sufficient to face a particular resolution action, and where the ex

post contributions that should be raised in order to cover the necessary additional

amounts are not immediately accessible. Pursuant to the statement of the Eurogroup

and of the Council of 18 December 2013, in order to ensure continuous sufficient

financing during the transitional period, the Contracting Parties concerned by a

particular resolution action should provide bridge financing from national sources or

the European Stability Mechanism ("ESM") in line with agreed procedures,

including the setting up of possibilities for temporary transfers between national

compartments. The Contracting Parties should have in place procedures allowing

them to address any request for bridge financing in a timely manner. A common

backstop will be developed during the transitional period. Such a backstop will

facilitate borrowings by the Fund. The banking sector will ultimately be liable for

repayment by means of contributions in all participating Member States, including

ex post contributions. Those arrangements will ensure equivalent treatment across all

Contracting Parties participating in the Single Supervisory Mechanism and the

Single Resolution Mechanism, including Contracting Parties joining at a later stage,

in terms of rights and obligations and both in the transition period and in the steady

state. Those arrangements will respect a level playing field with Member States that

do not participate in the Single Supervisory Mechanism and in the Single Resolution

Mechanism.

(14) This Agreement should be ratified by all the Member States whose currency

is the euro and by the Member States whose currency is not the euro that participate

in the Single Supervisory Mechanism and in the Single Resolution Mechanism.

(15) Member States whose currency is not the euro that are not Contracting

Parties should accede to this Agreement with full rights and obligations, in line with

those of the Contracting Parties, as from the date when they effectively adopt the

euro as currency or, otherwise, as from the date of entry into force of the ECB

decision on close cooperation referred to in Article 7(2) of Regulation (EU) No.

1024/2013.

(16) On 21 May 2014, the representatives of the Governments of the Member

States authorized the Contracting Parties to request the European Commission and

the Single Resolution Board ("the Board") to perform the tasks provided for in this

Agreement.

(17) Article 15 of the SRM Regulation, as on the date of its initial adoption,

establishes general principles governing resolution, pursuant to which the

shareholders of the institution under resolution bear first losses and the creditors of

the institution under resolution bear losses after the shareholders in accordance with

the order of priority of their claims. Article 27 of the SRM Regulation lays down

accordingly a bail-in tool that requires that a contribution to loss absorption and

recapitalisation equal to an amount not less than 8% of the total liabilities including

own funds of the institution under resolution, measured at the time of resolution

action in accordance with the valuation provided for in Article 20 of the SRM

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

Regulation, has been made by shareholders, the holders of relevant capital

instruments and other eligible liabilities through write down, conversion or

otherwise, and also requires that the contribution from the Fund does not exceed 5%

of the total liabilities including own funds of the institution under resolution,

measured at the time of resolution action in accordance with the valuation provided

for in Article 20 of the SRM Regulation, unless all unsecured, non-preferred

liabilities, other than eligible deposits, have been written down or converted in full.

Moreover, Articles 18, 52 and 55 of the SRM Regulation, as on the date of its initial

adoption, establish a number of procedural rules on decision making of the Board

and the institutions of the Union. Those elements of the SRM Regulation constitute

an essential basis for the consent of the Contracting Parties to be bound by this

Agreement.

(18) The Contracting Parties acknowledge that the relevant provisions of the

Vienna Convention on Law of Treaties as well as international customary law shall

apply in respect of any fundamental change of circumstances that has taken place

against their will and that affects the essential basis of the consent of the Contracting

Parties to be bound by the provisions of this Agreement, as referred to in recital (17).

The Contracting Parties may accordingly invoke the consequences of any

fundamental change of circumstances that has taken place against their will,

pursuant t o public i nternational law. If a Contracting Party invokes such

consequences, any other Contracting Party can submit the matter to the Court of

Justice of the European Union ("Court of Justice"). The Court of Justice should be

granted the power to verify the existence of any fundamental change of

circumstances and the consequences deriving from it. The Contracting Parties

recognise that such invocation of consequences after the repeal or the amendment of

any of the elements of the SRM Regulation referred to in recital (17), that has taken

place against the will of any of the Contracting Parties and which is susceptible of

affecting the essential basis of their consent to be bound by the provisions of this

Agreement, will amount to a dispute concerning the application of this Agreement

for the purposes of Article 273 of the Treaty on the Functioning of the European

Union (TFEU) that can therefore be submitted to the Court of Justice by virtue of

that provision. Any Contracting Party may also ask the Court of Justice for interim

measures, in accordance with Article 278 TFEU and Articles 160 to 162 of the Rules

of Procedure of the Court of Justice. * When deciding on the dispute, as well as on

the granting of interim measures, the Court of Justice should take into account the

obligations of the Contracting Parties under TEU and TFEU, including those relating

to the Single Resolution Mechanism and its integrity.

(19) The determination whether the institutions of the Union, the Board and the

national resolution authorities apply the bail-in tool in a manner which is compatible

with the law of the Union falls within the powers of the Court of Justice in

accordance with the legal remedies laid down in TEU and TFEU, namely Articles

258, 259, 260, 263, 265 and 266 TFEU.

(20) As an instrument of public international law, the rights and obligations laid

down in this Agreement are subject to the principle of reciprocity. Accordingly, the

consent by each of the Contracting Parties to be bound by this Agreement depends

upon the equivalent performance of the rights and obligations incumbent on each of

the Contracting Parties. As a consequence, the breach by any of the Contracting

Parties of its obligation to transfer the contributions towards the Fund should entail

the exclusion of the entities authorised in their territories from access to the Fund.

*

Rules of Procedure of the Court of Justice of 25 September 2012 (OJ L 265, 29.9.2012, p.1),

including any subsequent amendments.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

The Board and the Court of Justice should be granted the power to determine and

declare whether the Contracting Parties have breached their commitment to transfer

the contributions, in accordance with the procedures laid down in this Agreement.

The Contracting Parties recognise that in case of a breach of the obligation to

transfer the contributions, the only legal consequence will be the exclusion of the

Contracting Party that has committed the breach from financing under the Fund and

that the obligations of the other Contracting Parties under the Agreement shall

remain unaffected.

(21) This Agreement lays down a mechanism whereby the participating Member

States commit to reimburse, jointly, promptly and with interest to each Member State

that is not participating in the Single Supervisory Mechanism and in the Single

Resolution Mechanism, the amount that that non-participating Member State has

paid in own resources corresponding to the use of the general budget of the Union in

cases of non-contractual liability and costs related thereto, in respect of the exercise

of powers by the institutions of the Union under the SRM Regulation. The liability

of each participating Member State under this arrangement should be separate and

individual, and not joint and several, and hence each of the participating Member

States should respond only for their part of the obligation of reimbursement as

determined in accordance with this Agreement.

(22) Disputes concerning the interpretation and application of this Agreement

arising between the Contracting Parties, including those concerning compliance with

the obligations laid down therein, should be submitted to the jurisdiction of the

Court of Justice in accordance with Article 273 TFEU. Member States whose

currency is not the euro that are not parties to this Agreement should be able to

submit to the Court of Justice any dispute on the interpretation and enforcement of

the provisions on compensation for non-contractual liability and costs related thereto

laid down in this Agreement.

(23) The transfer of contributions by Contracting Parties which become part of

the Single Supervisory Mechanism and of the Single Resolution Mechanism at a date

subsequent to the date of application of this Agreement should be made respecting

the principle of equality of treatment with the Contracting Parties that participate in

the Single Supervisory Mechanism and in the Single Resolution Mechanism at the

date of application of this Agreement. Contracting Parties participating in the Single

Supervisory Mechanism and in the Single Resolution Mechanism at the date of

application of this Agreement are not supposed to bear the burden of resolutions to

which the national financial arrangements of those participating at a later stage were

supposed to contribute. Likewise, the latter are not supposed to bear the cost of

resolutions, arising before the date when they become participating Member States,

for which the Fund should be liable.

(24) In the event that the close cooperation with the ECB of a Contracting Party,

whose currency is not the euro, is terminated in accordance with Article 7 of

Regulation (EU) No. 1024/2013, a fair partition of the cumulated contributions from

the Contracting Party concerned should be decided taking into account the interests

of both the Contracting Party concerned and the Fund. Accordingly, Article 4(3) of

the SRM Regulation lays down the modalities, criteria and the procedure for the

Board to agree with the Member State concerned by termination of close cooperation

on the recoupment of contributions transferred by that Member State.

(25) While fully respecting the procedures and requirements of the Treaties on

which the European Union is founded, the Contracting Parties’ objective is to

incorporate the substance provisions of this Agreement, in accordance with the TEU

and the TFEU as soon as possible into the legal framework of the Union.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

HAVE AGREED UPON THE FOLLOWING PROVISIONS

TITLE I

PURPOSE AND SCOPE

ARTICLE 1

1. By this Agreement, the Contracting Parties commit to

(a) transferring the contributions raised at national level in accordance with

the BRR Directive and the SRM Regulation to the Single Resolution

Fund ("the Fund") established by that Regulation; and

(b) allocating, during a transitional period starting at the date of application

of this Agreement as determined under Article 12(2) of this Agreement

and elapsing at the date when the Fund reaches the target level fixed in

Article 69 of the SRM Regulation but not later than 8 years after the

date of application of this Agreement (the transitional period), the

contributions they raise at national level in accordance with the SRM

Regulation and the BRR Directive to different compartments

corresponding to each Contracting Party. The use of the compartments

shall be subject to a progressive mutualisation in such a manner that

they will cease to exist at the end of the transitional period,

thereby supporting the effective operations and functioning of the Fund.

2. This Agreement shall apply to the Contracting Parties whose institutions are

subject to the Single Supervisory Mechanism and the Single Resolution Mechanism,

in accordance with the relevant provisions of, respectively, Regulation (EU) No.

1024/2013 and of the SRM Regulation (the Contracting Parties participating in the

Single Supervisory Mechanism and in the Single Resolution Mechanism).

TITLE II

CONSISTENCY AND RELATIONSHIP WITH THE LAW OF THE UNION

ARTICLE 2

1. This Agreement shall be applied and interpreted by the Contracting Parties

in conformity with the Treaties on which the European Union is founded and with

European Union law, in particular Article 4(3) of the TEU and Union legislation

concerning the resolution of institutions.

2. This Agreement shall apply insofar as it is compatible with the Treaties on

which the European Union is founded and with the Union law. It shall not encroach

upon the competences of the Union to act in the field of the internal market.

3. For the purposes of this Agreement, the relevant definitions set out in

Article 3 of the SRM Regulation shall apply.

TITLE III

TRANSFER OF CONTRIBUTIONS AND COMPARTMENTS

ARTICLE 3

Transfer of contributions

1. The Contracting Parties jointly commit to irrevocably transfer to the Fund

the contributions that they raise from the institutions authorised in each of their

territories by virtue of Articles 70 and 71 of the SRM Regulation, and in accordance

with the criteria laid down therein and in the delegated and implementing acts to

which they refer. The transfer of contributions shall take place in accordance with

the conditions laid down under Articles 4 to 10 of this Agreement.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

2. The Contracting Parties shall transfer the ex ante contributions

corresponding to every year by 30 June of that year at the latest. The initial transfer

of ex ante contributions to the Fund will take place by 30 June 2016 at the latest or,

if the Agreement has not entered into force by that date, six months after its date of

entry into force at the latest.

3. Contributions raised by the Contracting Parties in accordance with Articles

103 and 104 of the BRR Directive before the date of application of this Agreement

shall be transferred to the Fund by 31 January 2016 at the latest or, if the Agreement

has not entered into force by that date, one month after its date of entry into force at

the latest.

4. Any amount disbursed by the resolution financing arrangement of a

Contracting Party before the date of application of this Agreement in respect of

resolution actions within its territory shall be deducted from those contributions to

be transferred by that Contracting Party towards the Fund referred to in paragraph 3.

In such a case, the Contracting Party in question shall remain bound to transfer

towards the Fund an amount equivalent to that which would have been necessary to

achieve the target level of its resolution financing arrangement, in accordance with

Article 102 of the BRR Directive and within the deadlines therein provided.

5. The Contracting Parties shall transfer ex post contributions immediately

after their collection.

ARTICLE 4

Compartments

1. During the transitional period contributions raised at national level shall be

transferred to the Fund in such a manner that they are allocated to compartments

corresponding to each Contracting Party.

2. The size of the compartments of each Contracting Party shall be equal to the

totality of contributions payable by the institutions authorized in each of their

territories pursuant to Articles 69 and 70 of the SRM Regulation as well as to the

delegated and implementing acts referred to therein.

3. The Board shall, at the date of entry into force of this Agreement, draw a list

for information purposes only detailing the size of the compartments of each

Contracting Party. That list shall be updated every year of the transitional period.

ARTICLE 5

Functioning of the compartments

1. Where in accordance with the relevant provisions of the SRM Regulation

recourse to the Fund is decided, the Board shall have the power to dispose of the

compartments of the Fund in the following manner

(a) In the first place, costs shall be borne by the compartments

corresponding to the Contracting Parties where the institution or the

group under resolution are established or authorised. When a

cross-border group is under resolution, costs shall be distributed

between the different compartments corresponding to the Contracting

Parties where the parent undertaking and subsidiaries are established or

authorised in proportion to the relative amount of contributions that

each of the entities of the group under resolution has provided to their

respective compartments with respect to the aggregate amount of

contributions that all the entities of the group have provided to their

national compartments.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

In case a Contracting Party where the parent undertaking or subsidiary

are established or authorised considers that the application of this

criterion for distribution of costs referred to in the first subparagraph

leads to a large asymmetry between the distribution of costs between

compartments and the risk profile of the entities concerned by

resolution, it may request to the Board to consider, additionally and

without any delay, the criteria laid down under Article 107(5) of the

BRR Directive. If the Board does not follow the request submitted by

the Contracting Party concerned, it shall explain its position publicly.

Recourse shall be had to the financial means available within the

compartments corresponding to the Contracting Parties referred to in

the first subparagraph, up to the cost that each national compartment is

due to contribute according to the criteria for distribution of costs laid

down in the first and second subparagraphs, in the following manner

-

during the first year of the transitional period, recourse shall be

had to all the financial means available within the said

compartments;

-

during the second and third year of the transitional period,

recourse shall be had to the 60% and 40% respectively of

financial means available within the said compartments;

-

during the subsequent years of the transitional period, the

availability of the financial means in the compartments

corresponding to these relevant Contracting Parties shall decrease

annually by 6⅔ percentage points.

The referred decrease per year of the availability of financial means in

the compartments corresponding to the relevant Contracting Parties

shall be spread evenly per quarter.

(b) In the second place, if financial means available in the compartments of

the Contracting Parties concerned referred to in point (a) are not

sufficient to comply with the mission of the Fund as referred to in

Article 76 of the SRM Regulation, recourse shall be had to the available

financial means in the compartments of the Fund corresponding to all

the Contracting Parties.

The financial means available in the compartments of all the

Contracting Parties shall be supplemented, to the same degree specified

in the third subparagraph of this point, by the remaining financial means

in the national compartments corresponding to the Contracting Parties

concerned by resolution referred to in point (a).

In case of a cross-border group resolution, the allocation of financial

means made available between the compartments of the Contracting

Parties concerned pursuant to the first and second subparagraphs of this

point shall follow the same key for the distribution of costs among

them, as laid down under point (a). If the institution or institutions

authorised in one of the Contracting Parties concerned subject to the

group resolution do not need the totality of the financial means

available under this point (b), the available financial means not needed

under this point (b) shall be used in the resolution of the entities

authorised in the other Contracting Parties concerned by the group

resolution.

During the transitional period, recourse to all the national compartments

of the Contracting Parties shall be made in the following manner

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

-

during the first and second year of the transitional period,

recourse shall be had to the 40% and 60% respectively of the

financial means available within the said compartments;

-

during the subsequent years of the transition period, the

availability of the financial means in the said compartments shall

increase annually by 6⅔ percentage points.

The referred increase per year of the availability of the financial means

in all the national compartments of the Contracting Parties shall be

spread evenly per quarter.

(c) In the third place, if the financial means used in accordance with point

(b) are not sufficient to comply with the mission of the Fund as referred

to in Article 76 of the SRM Regulation, recourse shall be had to any

remaining financial means in the compartments corresponding to the

Contracting Parties concerned referred to in point (a).

In case of cross-border group resolution, recourse shall be had to the

compartments of the Contracting Parties concerned that have not

provided enough financial means under points (a) and (b) in relation to

the resolution of entities authorised in their territories. Contributions by

each compartment shall be determined according to the criteria for

distribution of costs laid down in point (a).

(d) In the fourth place, and without prejudice to the powers of the Board

referred to under point (e), if the financial means referred to in point (c)

are not sufficient to cover the costs of a particular resolution action, the

Contracting Parties concerned referred to in point (a) shall transfer to

the Fund the extraordinary ex post contributions from the institutions

authorized in their respective territories, raised in accordance with the

criteria laid down in Article 71 of the SRM Regulation.

In the case of cross-border group resolution, ex post contributions shall

be transferred by the Contracting Parties concerned that have not

provided enough financial means under points (a) to (c) in relation to

the resolution of entities authorised in their territories.

(e) If the financial means referred to in point (c) are not sufficient to cover

the costs of a particular resolution action, and as long as extraordinary

ex post contributions referred to in point (d) are not immediately

accessible, including for reasons relating to the stability of the

institutions concerned, the Board may exercise its power to contract for

the Fund borrowings or other forms of support in accordance with

Articles 73 and 74 of the SRM Regulation, or its power to make

temporary transfers between compartments in accordance with Article 7

of this Agreement.

In case the Board decides to exercise the powers referred to in the first

subparagraph of this point, the Contracting Parties concerned referred to

in point (d) shall transfer to the Fund the extraordinary ex post

contributions in order to reimburse the borrowings or other form of

support, or the temporary transfer between compartments.

2. Returns of investments of the amounts transferred to the Fund, in

accordance with Article 75 of the SRM Regulation, shall be allocated to each of the

compartments pro rata on the basis of their respective available financial means,

excluding any claims or irrevocable payment commitments for the purposes of

Article 76 of the SRM Regulation attributable to each compartment. Returns of

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

investments of the resolution operations that the Fund may undertake, in accordance

w i t h Ar t i c l e 7 6 o f t h e S R M R eg u l a t i o n , s h a l l b e a l l o c a t e d t o e a c h o f t h e

compartments pro rata on the basis of their respective contribution to a particular

resolution action.

3. All the compartments shall be merged and shall cease to exist after the

elapsing of the transitional period.

ARTICLE 6

Transfer of additional ex ante contributions and target level

1. The Contracting Parties shall ensure that, where appropriate, they replenish

the Fund through ex ante contributions, to be paid within the periods laid down in

Article 69(2), (3) and (5)(a) of the SRM Regulation in an amount equivalent to that

required to achieve the target level specified in Article 69(1) of the SRM Regulation.

2. During the transitional period, the transfer of contributions related to

replenishment shall be distributed between the compartments in the following

manner

(a) the Contracting Parties concerned by resolution shall transfer

contributions to the part of their compartment that has not yet been

subject to mutualisation in accordance with points (a) and (b) of Article

5(1);

(b) all the Contracting Parties shall transfer contributions to the part of their

respective compartments subject to mutualisation in accordance with

points (a) and (b) of Article 5(1).

ARTICLE 7

Temporary transfer between compartments

1. Without prejudice to the obligations laid down under points (a) to (d) of

Article 5(1), the Contracting Parties concerned by resolution may, during the

transitional period, request to the Board to temporarily make use of the part of the

financial means available in the compartments of the Fund not yet mutualised

corresponding to the other Contracting Parties. In such a case, the Contracting

Parties concerned shall subsequently transfer to the Fund, before the transitional

period has elapsed, extraordinary ex post contributions in an amount equivalent to

the one received by their compartments, plus the interest accrued, so that the other

compartments are refunded.

2. The amount temporarily transferred from each of the compartments to the

recipient ones shall be pro rata to their size, as determined under Article 4(2) and

shall not exceed 50% of the available financial means within each compartment not

yet subject to mutualisation. In case of cross-border group resolution, the allocation

of financial means made available between the compartments of the Contracting

Parties concerned pursuant to this paragraph shall follow the same key for the

distribution of costs among them, as laid down under point (a) of Article 5(1).

3. Decisions of the Board on the request for the temporary transfer of financial

means between compartments referred to in paragraph 1 shall be taken by simple

majority of the members of its plenary session, as specified in Article 52(1) of the

SRM Regulation. In its decision on temporary transfer, the Board shall specify the

rate of interest, the period for refunding and other terms and conditions concerning

the transfer of financial means between compartments.

4. The decision of the Board agreeing on the temporary transfer of financial

means referred to in paragraph 3 may only enter into force if no objection has been

expressed by any of the Contracting Parties from whose compartments the transfer

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

has been made within a period of four calendar days since the date of adoption of the

decision.

During the transitional period, the right of objection of a Contracting Party may

only be exercised if

(a) it might require the financial means from the national compartment that

corresponds to it to finance a resolution operation in the near term or if

the temporary transfer would jeopardise the conduct of an ongoing

resolution action within its territory;

(b) the temporary transfer would take more than the 25% of its part of the

national compartment not yet subject to mutualisation in accordance

with points (a) and (b) of Article 5(1); or

(c) it considers that the Contracting Party whose compartment benefits

from the temporary transfer is not providing guarantees of refunding

from national sources or support from the ESM in line with agreed

procedures.

The Contracting Party intending to object shall duly substantiate the occurrence of

any of the circumstances referred to in points (a) to (c).

In case objections are raised in accordance with this paragraph, the decision on

temporary transfer of the Board shall be adopted excluding the financial means of

the compartments of the objecting Contracting Parties.

5. If an institution of a Contracting Party from whose compartment financial

means have been transferred by virtue of this Article is subject to resolution, that

Contracting Party may request t he Board to transfer from t he Fund to its

compartment an amount equivalent to that initially transferred from that

compartment. The Board shall, upon such a request, agree immediately on the

transfer.

In such a case, the Contracting Parties that initially benefited from the temporary

use of financial means shall be held liable to transfer to the Fund the amounts

allocated to the Contracting Party concerned pursuant to the first subparagraph, in

accordance with the terms and conditions to be specified by the Board.

6. The Board shall specify general criteria determining the conditions upon

which the temporary transfer of financial means among compartments envisaged in

this Article shall take place.

ARTICLE 8

Contracting Parties whose currency is not the euro

1. In the case that at a date subsequent to the one of application of this

Agreement under Article 12(2) a decision is adopted by the Council of the European

Union abrogating the derogation of a Contracting Party whose currency is not the

euro, as defined in Article 139(1) TFEU or its exemption, as referred to in Protocol

(No. 16) on certain provisions related to Denmark annexed to the TEU and the TFEU

("Protocol on certain provisions related to Denmark") or if, in the absence of any

such decision, a Contracting Party whose currency is not the euro becomes part of

the Single Supervisory Mechanism and of the Single Resolution Mechanism, it shall

transfer towards the Fund an amount of contributions raised in its territory

equivalent to the part of the total target level for its national compartment calculated

in accordance with Article 4(2), thus equal to that which would have been

transferred by the Contracting Party concerned if it had participated in the Single

Supervisory Mechanism and the Single Resolution Mechanism since the date of

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

application of this Agreement under Article 12(2).

2. Any amount disbursed by the resolution financing arrangement of a

Contracting Party referred to in paragraph 1 in respect of resolution actions within

its territory shall be deducted from those to be transferred by that Contracting Party

towards the Fund by virtue of paragraph 1. In such a case, the Contracting Party in

question shall remain bound to transfer towards the Fund an amount equivalent to

that which would have been necessary to achieve the target level of its resolution

financing arrangement, in accordance with Article 102 of the BRR Directive and

within the deadlines therein provided.

3. The Board shall determine, in agreement with the Contracting Party

concerned, the exact amount of contributions to be transferred by it, pursuant to the

criteria laid down in paragraphs 1 and 2.

4. The costs of any resolution action initiated in the territory of the Contracting

Parties whose currency is not the euro before the date when the decision abrogating

their derogation, as defined in Article 139(1) TFEU, or their exemption, as referred

to in the Protocol on certain provisions related to Denmark, takes effect or before the

date of entry into force of the decision of the ECB on close cooperation referred to in

Article 7(2) of Regulation (EU) No. 1024/2013 shall not be borne by the Fund.

If the ECB, in its comprehensive assessment of the credit institutions referred to in

point (b) of Article 7(2) of Regulation (EU) No. 1024/2013, considers that any of the

institutions of the Contracting Parties concerned is failing or likely to fail, resolution

costs of resolution actions of those credit institutions shall not be borne by the Fund.

5. In case of termination of close cooperation with the ECB, contributions

transferred by the Contracting Party concerned by termination are recouped in

accordance with Article 4(3) of the SRM Regulation.

Termination of close cooperation with the ECB shall not affect the rights and

obligations of the Contracting Parties stemming from resolution actions that have

taken place during the period in which those Contracting Parties are subject to this

Agreement and that are related to

-

the transfer of ex post contributions, under point (d) of Article 5(1);

-

the replenishment of the Fund, under Article 6; and

-

the temporary transfer between compartments, under Article 7.

ARTICLE 9

Respect of the general principles and objectives of resolution

1. The use of the Fund on a mutual basis and the transfer of contributions to the

Fund shall be contingent upon the permanence of a legal framework on resolution

whose rules are equivalent to, and lead at least to the same result of those under the

SRM Regulation as laid down in the following rules, and without changing them

(a) The procedural rules on the adoption of a resolution scheme as laid

down under Article 18 of the SRM Regulation;

(b) The Board's decision-making rules as laid down in Articles 52 and 55 of

the SRM Regulation;

(c) General principles concerning resolution as laid down in Article 15 of

the SRM Regulation, notably the principles that the shareholders of the

institution under resolution bear first losses and that the creditors of the

institution under resolution bear losses after the shareholders in

accordance with the order of priority of their claims, enshrined in points

(a) and (b) of paragraph (1) thereof;

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

(d) The rules on the resolution tools referred to under Article 22(2) of the

SRM Regulation, notably those concerning the application of the bail-in

tool laid down under Article 27 thereof and in Articles 43 and 44 of the

BRR Directive and the specific thresholds that they establish related to

the imposition of losses on shareholders and on creditors and the

contribution of the Fund to a particular resolution action.

2. In case the rules concerning resolution referred to in paragraph 1, provided

for in the SRM Regulation as on the date of its initial adoption, are repealed, or

otherwise amended against the will of any Contracting Party, including the adoption

of bail-in rules in a manner which is not equivalent or that does not lead, at least, to

the same and not less stringent result than that deriving from the SRM Regulation as

on the date of its initial adoption, and this Contracting Party exercises its rights

under public international law regarding a fundamental change of circumstances, any

other Contracting Party may, on the basis of Article 14 of this Agreement, request

the Court of Justice to verify the existence of a fundamental change of circumstances

and the consequences ensuing from it, in accordance with public international law.

In its application, any Contracting Party may request the Court of Justice to suspend

the operation of a measure which is the object of the dispute, in which case Article

278 TFEU and Articles 160 to 162 of the Rules of Procedure of the Court of Justice

shall be applicable.

3. The procedure referred to in paragraph 2 of this Article shall not prejudge or

affect recourse to legal remedies provided for under Articles 258, 259, 260, 263, 265

and 266 TFEU.

ARTICLE 10

Compliance

1. Contracting Parties shall take the necessary measures in their national legal

orders to ensure compliance with their obligation to jointly transfer the contributions

in accordance with this Agreement.

2. Without prejudice to the power of the Court of Justice under Article 14 of

this Agreement, the Board, acting on its own initiative or at the request of any

Contracting Party, may consider whether a Contracting Party has failed to comply

with its obligation to transfer the contributions to the Fund, as established in this

Agreement.

In case the Board finds that a Contracting Party has failed to comply with its

obligation to transfer the contributions, it shall set a deadline for the Contracting

Party concerned to take the necessary measures in order to put an end to the breach.

In case the Contracting Party concerned does not take the necessary measures to put

an end to the breach within the deadline fixed by the Board, the use of compartments

of all the Contracting Parties as laid down in point (b) of Article 5(1) shall be

excluded in relation to the resolution of institutions authorised in the Contracting

Party concerned. That exclusion shall cease to apply as from the moment when the

Board determines that the Contracting Party concerned has taken the necessary

measures to put an end to the breach.

3. Decisions of the Board under this Article shall be taken by simple majority

of the Chair and the members referred to in point (b) of Article 43(1) of the SRM

Regulation.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

TITLE IV

GENERAL AND FINAL PROVISIONS

ARTICLE 11

Ratification, approval or acceptance and entry into force

1. This Agreement shall be subject to ratification, approval or acceptance by its

signatories in accordance with their respective constitutional requirements. The

instruments of ratification, approval or acceptance shall be deposited with the

General Secretariat of the Council of the European Union ("the Depositary"). The

Depositary shall notify the other signatories of each deposit and the date thereof.

2. This Agreement shall enter into force on the first day of the second month

following the date when instruments of ratification, approval or acceptance have

been deposited by signatories participating in the Single Supervisory Mechanism

and in the Single Resolution Mechanism that represent no less than 90% of the

aggregate of the weighted votes of all Member States participating in the Single

Supervisory Mechanism and in the Single Resolution Mechanism, as determined by

Protocol (No. 36) on transitional provisions annexed to the TEU and the TFEU.

ARTICLE 12

Application

1. This Agreement shall apply amongst the Contracting Parties that have

deposited their instruments of ratification, approval or acceptance provided that the

SRM Regulation has previously entered into force.

2. Subject to paragraph 1 of this Article, and provided that this Agreement has

entered into force in accordance with Article 11(2), it shall apply as from 1 January

2016 amongst the Contracting Parties participating in the Single Supervisory

Mechanism and in the Single Resolution Mechanism that have deposited their

instruments of ratification, approval or acceptance by that date. If this Agreement

has not entered into force by 1 January 2016 it shall apply as from its date of entry

into force, amongst the Contracting Parties participating in the Single Supervisory

Mechanism and in the Single Resolution Mechanism that have deposited their

instruments of ratification, approval or acceptance by that date.

3. This Agreement shall apply to the Contracting Parties participating in the

Single Supervisory Mechanism and in the Single Resolution Mechanism that have

not deposited their instruments of ratification, approval or acceptance by the date of

application under paragraph 2, as from the first day of the month following the

deposit of their respective instrument of ratification, approval or acceptance.

4. This Agreement shall not apply to the Contracting Parties that have

deposited their instruments of ratification, approval or acceptance but that do not

participate in the Single Supervisory Mechanism and in the Single Resolution

Mechanism by the date of application of this Agreement. Those Contracting Parties

shall however be part of the special agreement referred to in Article 14(2) as from

the date of application of this Agreement for the purposes of submitting to the Court

of Justice any dispute concerning the interpretation and enforcement of Article 15.

It shall apply to the Contracting Parties referred to in the first subparagraph as

from the date when the decision abrogating their derogation, as defined in Article

139(1) TFEU or their exemption, as referred to in Protocol on certain provisions

related to Denmark, takes effect or, in the absence thereof, as from the date of entry

into force of the ECB decision on close cooperation referred to in Article 7(2) of

Regulation (EU) No. 1024/2013.

Subject to its Article 8, this Agreement shall cease to apply to the Contracting

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

Parties that have established the close cooperation with the ECB referred to in

Article 7(2) of Regulation (EU) No. 1024/2013 as from the date of termination of

that close cooperation in accordance with Article 7(8) of that Regulation.

ARTICLE 13

Accession

This Agreement shall be open to accession by Member States other than the

Contracting Parties. Subject to paragraphs 1 to 3 of Article 8 accession shall be

effective upon depositing the instrument of accession with the Depositary, which

shall notify the other Contracting Parties thereof. Following authentication by the

Contracting Parties, the text of this Agreement, in the official language of the

acceding Member State that is also an official language of the institutions of the

Union, shall be deposited in the archives of the Depositary as an authentic text of

this Agreement.

ARTICLE 14

Dispute settlement

1. Where a Contracting Party disagrees with another Contracting Party on the

interpretation of any of the provisions of this Agreement or when it considers that

another Contracting Party has failed to comply with its obligations under this

Agreement, it may bring the matter before the Court of Justice. The judgment of the

Court of Justice shall be binding on the parties to the proceedings.

If the Court of Justice finds that a Contracting Party has failed to comply with its

obligations under this Agreement, the Contracting Party concerned shall take the

necessary measures to comply with the judgment within a period to be decided by

the Court of Justice. In case the Contracting Party concerned does not take the

necessary measures to put an end to the breach within the deadline fixed by the

Court of Justice, the use of compartments of all the Contracting Parties as laid down

in point (b) of Article 5(1) shall be excluded in relation to institutions authorised in

the Contracting Party concerned.

2. This Article constitutes a special agreement between the Contracting Parties

within the meaning of Article 273 TFEU.

3. Member States whose currency is not the euro that have not ratified this

Agreement may notify the Depositary of their intention to be party to the special

agreement referred to in paragraph 2 of this Article for the purposes of submitting to

the Court of Justice any dispute concerning the interpretation and enforcement of

Article 15. The Depositary shall communicate the notification by the Member State

concerned to the Contracting Parties, upon which communication the Member State

concerned shall become party to the special agreement referred to in paragraph 2 of

this Article for the purposes described in this paragraph.

ARTICLE 15

Compensation

1. The Contracting Parties commit to reimburse jointly, promptly and with

interest each Member State that is not participating in the Single Supervisory

Mechanism and in the Single Resolution Mechanism ("non-participating Member

State") for the amount that that non-participating Member State has paid in own

resources corresponding to the use of the general budget of the Union in cases of

non-contractual liability and costs related thereto, in respect of the exercise of

powers by the institutions of the Union under the SRM Regulation.

2. The amount that each of the non-participating Member States is deemed to

have contributed to the non-contractual liability and costs related thereto shall be

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

determined pro rata on the basis of their respective gross national income

determined in accordance with Article 2(7) of Council Decision 2007/436/EC,

Euratom * or with any ensuing Union act amending or repealing it.

3. Compensation costs shall be distributed among the Contracting Parties pro

rata on the basis of the weight of their respective gross national income, as

determined in accordance with Article 2(7) of Council Decision 2007/436/EC,

Euratom or with any ensuing Union act amending or repealing it.

4. The non-participating Member States shall be reimbursed on the dates of the

entries in the accounts referred to in Article 9(1) of Council Regulation (EC,

Euratom) No. 1150/2000 # or in any ensuing Union act amending or repealing it, of

the amounts corresponding to the payments from the Union budget to settle the

non-contractual liability and costs related thereto following the adoption of the

associated amending budget.

Any interest shall be calculated in accordance with the provisions on interest for

amounts made available belatedly applicable to the Union's own resources. Amounts

shall be converted between national currencies and the euro at an exchange rate

determined in accordance with the first subparagraph of Article 10(3) of Council

Regulation (EC, Euratom) No. 1150/2000 or with any ensuing Union act amending

or repealing it.

5. The Commission shall coordinate any reimbursement action by the

Contracting Parties, in accordance with the criteria laid down under paragraphs 1 to

3. The Commission’s coordination role shall include calculating the basis on which

payments are to be made, issuing notices to the Contracting Parties requiring

payments to be made and calculating interest.

ARTICLE 16

Review

1. Within two years of the date of entry into force of this Agreement, at the

latest and every 18 months thereafter, the Board shall assess and present to the

European Parliament and to the Council a report on the implementation of this

Agreement and in particular on the proper functioning of the mutual use of the Fund

and its impact on financial stability and the internal market.

2. Within ten years of the date of entry into force of this Agreement, at the

latest, on the basis of an assessment of the experience with its implementation

contained in the reports drawn up by the Board in accordance with paragraph 1, the

necessary steps shall be taken, in accordance with the TEU and the TFEU, with the

aim of incorporating the substance of this Agreement into the legal framework of the

Union.

Done at Brussels on 21 May 2014, in a single original, whose Bulgarian, Croatian,

Czech, Danish, Dutch, English, Estonian, Finnish, French, German, Greek,

Hungarian, Irish, Italian, Latvian, Lithuanian, Maltese, Polish, Portuguese,

Romanian, Slovak, Slovenian, Spanish and Swedish texts are equally authentic,

which shall be deposited in the archives of the Depositary which shall transmit a

duly certified copy to each of the Contracting Parties.

*

Council Decision of 7 June 2007 on the system of the European Communities' own resources (OJ

L 163, 23.6.2007, p. 17).

#

Council Regulation (EC, Euratom) No. 1150/2000 of 22 May 2000 implementing Decision

2007/436/EC, Euratom on the system of the Communities' own resources (OJ L 130, 31.5.2000,

p. 1), including any subsequent amendments.

PARTICIPATION WITHIN THE SINGLE RESOLUTION FUND

AND GRANTING OF FINANCIAL SUPPORT UNDER

THE SINGLE RESOLTION MECHANISM

DECLARATIONS OF INTENT BY THE CONTRACTING PARTIES AND

OBSERVERS OF THE INTERGOVERNMENTAL CONFERENCE THAT ARE

MEMBERS OF THE COUNCIL OF THE EUROPEAN UNION TO BE

DEPOSITED WITH THE AGREEMENT

Declaration no. 1

While fully respecting the procedural requirements of the Treaties on which the

European Union is founded, t he Contracting Parties and observers of t he

intergovernmental Conference that are members of the Council of the European

Union note that it is their objective and their intention that, unless they all agree

otherwise

(a) Article 4(3) of the SRM Regulation, as on the date of its initial

adoption, is not repealed or amended;

(b) the principles and rules related to the bail-in tool are not repealed or

amended in a way that is not equivalent and does not lead to, at least,

the same and not less stringent result than that deriving from the SRM

Regulation as on the date of its initial adoption.

Declaration no. 2

The signatories to the Intergovernmental Agreement on the transfer and

mutualisation of contributions to the Single Resolution Fund declare that they will

strive to complete its process of ratification in accordance with their respective

national legal requirements in due time so as to permit the Single Resolution

Mechanism to be fully operational by 1 January 2016.